In today's life lesson of YIYL (You Invest, You Lose), we revisit probably one of the dumbest ideas to come out of crypto, and boy has their been many, but DAOs. They are a load of shit, technical mumbo jumbo to try and skirt regulation. The DAO is meant to be some kind of fund that token holders vote on how funds are distributed. 

The truth is most token projects already have users with massive stake they gave themselves so there is no governance, it's masquerading as such to conduct operations while pretending not to be a business with a security attached to it.

Regulators are slow and sometimes dumb, but when blatant fuckery is amock, they do tend to step in and so the regulatory crackdown on crypto continues.

## CFTC comes after bZx Protocol

bZx was a protocol backing a margin trading, borrowing, lending and staking. It allowed for lenders, borrowers, and traders to interact with the most flexible front-end that spoke to multiple blockchains mainly ETH, MATIC, and BSC. Users could trade tokens as well as derivatives on the platform and this is where it starts to get a little sticky.

bZeroX is now charged with illegally operating as an unregistered FCM (Futures Commission Merchant) and have had to pay for it. The Commodity Futures Trading Commission on Thursday announced settled charges against the founders of bZeroX, the company behind the bZx protocol. 

The CFTC fined bZx founders Tom Bean and Kyle Kistner $250,000 for allegedly 

> “illegally offering leveraged and margined retail commodity transactions in digital assets,” as well as failing to adopt customer identification requirements known as KYC.



![ookidao.png](https://images.hive.blog/DQmNSpd334uj4RMVv9554UztHYerWcR2HBmWfAZGuPFUCng/ooki-dao.png)

## Doesn't stop there

Now you think a "protocol" couldn't get sued right? It's just code, but when the code is run by people on server, providing liquidity and managing the governance, it's pretty much a company. Even if you try to obscure that with a DAO and a governance token that does fuckall.

The CFTC also didn't fall for it and in a novel move, they also filed a lawsuit against an associated DAO. The CFTC alleges that the Ooki DAO, which Bean and Kistner purportedly founded as a way to decentralize control of the bZx protocol, likewise violated the same laws. 

Though Bean and Kistner settled charges against themselves and bZeroX, while neither admitting nor denying the charges, the CFTC is seeking penalties against the DAO.

If passed, the CTFC will push for anything from disgorgement of the DAO, fines, and potential trading and registration bans.

> “The order finds the DAO was an unincorporated association of which Bean and Kistner were actively participating members and liable for the Ooki DAO’s violations of the [Commodity Exchange Act] and CFTC regulations,” - the Commission stated in a press release.

Now answer me this, if something is so fucking decentralised, how does a regulatory body issue and enforce these requirements on it? If it's just meant to be code? Well because there are people and a centralised entity behind the whole thing and you can put pressure on them. 

DAOs are nothing but a larp and the instant governance token holders feel the heat they will capitulate like the larper's they've always been. 

This whole story is yet another lesson in decentralistion theatre and decentralisation in name only. This is yet another fresh slap of reality for shitcoiners, DAO's aren't shit, and they won't be able to skirt legal frameworks, if you're going to play in this space you're going to get slapped with fines for selling unregistered securities and for creating grey market trading opportunities. 

So you have two choices, you either KYC and comply or get fined and die.

## Aaand it's tanking

BZRX was the original token fro the project but it was then migrated Migration to OOKI on 18 December 2021, which is why it's so deeply tethered to the project and why the CTFC went after it.

![Screenshot 20220925 at 11.08.02.png](https://images.hive.blog/DQmeLZ3Sqvt8PU2su4wcCPk6arjC2ERHVKXU9u48pVsCM9Q/Screenshot%202022-09-25%20at%2011.08.02.png)

*Source: bZx Token price - [Coinmarketcap](https://coinmarketcap.com/currencies/bzx-protocol/)*

Ooki currently trades at $0.00508446, down from its peak of $0.060539, a 91.6% loss from its all-time high 9 months ago. I doubt we'll see a recovery either.

![Screenshot 20220925 at 11.16.17.png](https://images.hive.blog/DQmNwHiWQZVx7eqJFH5e2oRzaqiSE7b3QadvFuCUDrWLPKH/Screenshot%202022-09-25%20at%2011.16.17.png)

*Source: Ooki Token price - [CoinGecko](https://www.coingecko.com/en/coins/ooki)*

**Sources:**

- [cftc.gov](https://www.cftc.gov/PressRoom/PressReleases/8590-22)
- [decrypt.co](https://decrypt.co/110407/cftc-ooki-dao-bzx-lawsuit-legal-questions-defi)
- [cointelegraph.com](https://cointelegraph.com/news/ctfc-slammed-for-blatant-regulation-by-enforcement-over-ooki-dao-case)

## Have your say

What do you good people of HIVE think? 

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

## Let's connect

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